Rental Housing Investment Act

Big tax deduction for rental owners

If enacted, you would be able to elect a one-time depreciation deduction when you place qualifying residential rental property in service. The deduction would equal the smaller of (A) total dwelling units × $150,000 (or × $250,000 if the project meets specified low-income housing rules and you elect that option) or (B) 100% of the property's adjusted basis excluding land. You must elect the rule on your tax return for the placement year, and the property's basis would be reduced by the deduction before computing any other depreciation. The deduction would be computed for AMT purposes without certain section 56 adjustments. If the property stops qualifying within 10 years you would face recapture under section 1245; affordable-housing projects that stop meeting the rules within 15 years would face the extended 15-year recapture. The IRS (the Secretary) would issue guidance and certification rules, and the election would generally be irrevocable except in extraordinary circumstances.